In this Month's Builders Outlook - June 24th

Housing Shortage Hurting Middle-Class Americans Most

After years of crippling shortages, housing inventory is finally growing across the U.S., offering a glimmer of hope to aspiring homebuyers pushed to the sidelines since the pandemic.

Many of these new listings, however, are still out of reach for many, a new study by the National Association of Realtors (NAR) and Realtor.com shared with Newsweek found—especially middle-class Americans. The U.S. is in the midst of a housing affordability crisis which has its roots in the chronic lack of inventory that has accumulated since the Great Recession, after which the country underbuilt compared to its needs. This has recently been exacerbated by historically high mortgage rates.

While everyone is affected, some categories have been hit harder than others, with younger generations, and lower- and middle-class households, struggling the most with rising costs and the financial burden of homeownership, which is keeping them off the property ladder. These include teachers, nurses, and skilled trade workers—categories that are crucial to a well-functioning society.

Before the pandemic, according to the NAR/Realtor.com analysis of historic data, American households earning an average of $75,000 a year could afford 49 percent of homes for sale on the market—nearly half of the total.

In 2024, the share of homes they could buy had plunged to 20.8 percent; in 2025, it had modestly inched up to 21.2 percent—still less than half of what it used to be only five or six years before.

The percentage of homes that middle-class households can afford has likely grown with inventory: in March, the number of homes for sale in the U.S. market was up nearly 20 percent from a year earlier. Despite some progress, inventory levels remain far below what they used to be before the pandemic. Aspiring homebuyers in Montana, Idaho, California, Massachusetts, and Hawaii are facing the largest shortfalls in affordable housing in the country, the NAR/Realtor.com report found.

Households earning a little more, about $100,000 annually, are not doing much better. In March, they could afford 37.1 percent of listings, up from 36.9 percent last year, but down from the 64.7 percent reported in 2019.

The situation is even more dramatic for lower-income households, earning $50,000 annually. According to NAR/Realtor.com, they can only afford 8.7 percent of home listings today, down from 9.4 percent last year, while they should be able to access one-in-three listings in a balanced market.

One way to fix the ongoing housing crisis in the U.S. would be to build more homes—especially affordable ones. According to the NAR, the U.S. market needs 367,000 more home listings at a maximum price of $170,000, 416,000 more priced at or below $255,000, and 364,000 more priced under $340,000 to restore balance.

Edited from NEWSWEEK, May 2025